Richemont chairman Johann Rupert has described 2018 as a year of transition and consolidation as the group’s audited accounts for the year ending March 31, 2019, were published.
Completing the acquisition of Yoox Net-A-Porter (YNAP) and pre-owned luxury watch specialist Watchfinder boosted sales, which rose by 27% to €14 billion (£12bn).
Stripping out the turnover added by YNAP and Watchfinder, sales rose by a more modest 8%.
The luxury group’s jewellery maisons posted the strongest growth. During the 12 months, Cartier benefited from the enduring appeal of its jewellery collections, notably ‘Juste un Clou’, and the successful launch of the rejuvenated iconic ‘Santos de Cartier’ watch line, while Van Cleef & Arpels celebrated the 50th anniversary of its emblematic ‘Alhambra’ collection with much success, and continued to enrich its jewellery offer, notably with additional ‘Frivole’ creations.
At actual exchange rates, a 10% sales progression at Cartier and Van Cleef & Arpels was underpinned by double digit growth in jewellery and watches.
Operating results for the jewellery maisons increased by 16% compared to the prior year. The € 303 million (£263m) improvement primarily reflected higher sales, continued manufacturing efficiency gains and good cost control.
During the year, the jewellery maisons accelerated investments in both store renovations and communication initiatives. These investments included the renovation of the Cartier flagship store in London New Bond Street, alongside the relocation of the Van Cleef & Arpels IFC Pudong store in Shanghai, and the new Cartier corporate campaign and the Van Cleef & Arpels campaign celebrating Alhambra’s 50th anniversary.
Richemont has been buying back unsold stock over recent years in an effort to better match supply to demand across its global wholesale network, and Rupert suggests the re-balancing is working. The initiative is key to reducing grey market activity that has led to steep discounting hurting the group’s authorised dealers selling at full recommended retail prices.
No additional stock buy-backs were initiated in 2018-19, the report says. “The current year’s one-time charges primarily relate to previous year’s inventory buy-backs and portfolio transactions,” it states.
The chairman states: “The year under review has been one of transition and consolidation. We have continued our transformation journey with the successful tender offer on the shares we did not already own in Yoox Net-A-Porter, the leading global online luxury and fashion retailer, and the acquisition of Watchfinder & Co, a leading omni-channel platform for premium pre-owned timepieces.
“In a relatively supportive environment, sales increased by 27% at actual and constant exchange rates, reflecting growth across all business areas and distribution channels. Excluding YNAP and Watchfinder – collectively referred to as our ‘Online Distributors’ – sales for the period grew by 8% at both actual and constant exchange rates. Jewellery maisons and the retail channel posted the strongest performance. Most of our markets were in positive territory, led by double digit increases in the US and in all the main markets of Asia Pacific.”
He concludes: “Across the business areas, we are starting to see the benefits of recent initiatives targeting the qualitative improvement of our distribution network, the right-sizing of watch inventories at our multi-brand retail partners, and the adjustment of supply to the true level of end-customer demand.”